SA Rugby has turned in a post-tax profit for a second successive year. Due to some prudent cost-cutting measures and increases in revenue from sources such as broadcast rights, sponsorships and the successful Cape Town Sevens, SA Rugby has reported a profit of R8.5 million for 2019. This follows a profit of R2.3 million in 2018 which reversed the substantial losses over the previous two years (R62.4 million in 2017 and R15,7 million in 2016). But the organisation is careful not to shout too loudly about its financial discipline, acknowledging that the Covid-19 pandemic will have a drastic impact on its finances in 2020. In April, CEO Jurie Roux announced plans to cut R1 billion from the budget over the next eight months to ensure rugby can survive the crisis. Tournaments have been cancelled, operational budgets have been cut and staff salaries have been reduced as SA Rugby tackles the looming financial problems. While increased sponsorship revenues were partly responsible for the 2019 post-tax profit, SA Rugby will surely be facing calls from sponsors for a reduction in the amount they are paying as they certainly aren’t getting the exposure in 2020 that they were expecting. But for now, the 2019 financials announced at the SA Rugby AGM make for positive reading going into a very bleak 2020. – David O’Sullivan
From SA Rugby:Â
SA Rugby reported a post-tax profit of R8.5m at the end of 2019 through prudent management in an environment of major challenges it announced at the Annual General Meeting on Wednesday.
Those challenges have subsequently been dwarfed by the Covid-19 virus, said the Union, however the strict financial discipline the organisation had practiced in recent years meant it was able to face the pandemic from a position of relative strength, said Jurie Roux, CEO.
“The measures that we have implemented in recent years allowed us to deliver a very satisfactory result at the end of 2019. We improved our overall solvency and financial position through fully impairing all loans, investments or receivables where the recovery of such was in doubt,” said Roux.
“That meant that when the crisis struck our improved financial position allowed us the required time to formulate corrective measures to address the financial challenges unencumbered by any underlying weakness that could have worsened what is an extremely threatening situation.
“If this crisis had hit us two of three years ago it might have been a very different story.
“The pandemic has had the effect of tearing up all our approved budgetary plans but we have taken an aggressive approach to the potential impact of the virus. We have agreed our Industry Financial Impact Plan, which will cut R1,2bn from the budget of the entire South African rugby industry if required.
“It will be painful to endure for all rugby businesses, but it will mean that we will walk from the burning building still intact.”
The pandemic has overshadowed what was another exemplary piece of financial management by SA Rugby, considering the major challenges other rugby federations and sporting bodies have encountered, even prior to the onset of Covid-19.
Revenues increased by 2.5% to R1.29bn (2018 – R1.26bn) with increases in broadcasting, sponsorship, grants, insurance proceeds, royalties and the HSBC Cape Town Sevens event offset by a reduction in test guarantees due to fewer test matches, Rugby World Cup performance obligations and the closure of the Springbok Experience Rugby Museum.
Roux said operations continued to be funded by way of a bank overdraft for significant parts of the year and solutions had had to be found to address a number of issues including the loss of a broadcasting partner, budgeted Lottery income that did not materialise, further loan impairments and the R62m required to honour player and management performance commitments for winning RWC 2019.
However, the significant RWC 2019 obligation was offset by insurance mitigation plans while the investment in the rugby department (R372m in total) was rewarded with a Rugby World Cup victory in Japan.
Financial support for the 14 member unions and player welfare, through the use of player imagery and injury insurance, accounted for another 32% of operating expenditure (R275m).
Roux said: “One of the benefits of our approach is that we go into this crisis with a level of comfort that we can expect the financial support of our bank and key stakeholders in these difficult times.
“We reduced the overdraft from R68m to R7m but we have subsequently agreed an increased facility for 2020 to manage the inevitable cashflow issues create by the pandemic.”
In an electronic ballot for positions on the Executive Council, Mr Pat Kuhn and Mr Jannie Louw, were elected for four-year terms and Mr Schalk Liebenberg for a two-year term (the latter filling a vacant position).
Mr Francois Davids was re-elected as deputy president for a four-year term in a contest with Mr Jerry Segwaba.
In other business, accepted into associate membership of the South African Rugby Union were: The South African Rugby Referees’ Association; the South African National Department of Correctional Services Rugby Association and the South African National Police Services Rugby Association.
